In my more than 10 years of serving as editor of ENR Southeast (formerly Southeast Construction), I'm not sure I've ever been less sure of the general direction that the Southeast's construction market is heading than right now. For the past few years, the direction has pretty obviously been one of decline. And for years before the recession, it was pretty clear that up, up and away was the only direction the market would head.
In June and July -- for the first time in a long time -- things seemed to be shaking loose on the private-sector side. A Boca Raton-based developer announced plans to start construction on a luxury apartment complex in Tampa. Another developer indicated it would build a $66.5-million apartment complex in Delray Beach. Yet another firm said it was relaunching its $100-million condominium project in Aventura, Fla. Down the road, a company said it was dusting off its plans for a massive marina development in Fort Lauderdale and moving ahead on the $20-million first phase.
Even Florida Gov. Rick Scott (R) begrudgingly got in on the act, allowing Florida Secretary of Transportation Ananth Prasad to announce that Central Florida's $1.3-billion commuter-rail project, called SunRail, would indeed proceed to construction.
And it wasn't all just Florida activity. Cousins, one of Atlanta's top developers, announced it was going to start construction of the $250-million Emory Point mixed-use project in Atlanta. Over in Spartanburg, S.C., a developer was proposing to convert a former mill facility into loft apartments. The North Carolina Dept. of Transportation moved forward with its planned $215-million Outer Banks bridge project.
Also, the most recent reports on June's state construction activity from McGraw-Hill Construction -- publisher of ENR Southeast -- had been mostly positive news as well.
Florida's June construction contract activity increased by 32% compared to June 2010, while Georgia finally saw a massive, 72% boost in nonresidential contracts to register a 34% overall improvement. North Carolina registered a massive gain, by 98%, compared to last June, thanks to a big jump in nonbuilding (infrastructure) work. Only South Carolina experienced a downward slide in June contracts, according to McGraw-Hill, which estimated a 12% drop.
On the other hand, despite those nice June gains, on a year-to-date basis, the volume of new contracts for each of the four states is down, as we've reported previously. Florida is down 15% through the first six months of 2011; Georgia, -12%; North Carolina, -8%; and South Carolina, -9%. Of course, all of these numbers are in comparison to 2010, which was a downer of a year in its own right.
In ENR Southeast's July issue, contractors from around the Southeast offered their predictions for the rest of the year, and many were less than thrilled about their prospects.
The comments of Ray Riddle, vice president with Holder Construction Co., Atlanta, were representative of the general mood. On the one hand, Riddle said, "We are tracking some speculative deals that are starting to look real."
On the other hand, he continued, "I am not sure I would call anything improving, (it's) just not getting worse. We're starting to see some signs of activity, but not enough to call it an improvement."
Also, word came recently that McGraw-Hill Construction is downgrading its national forecast for 2011 to a 3% decline compared to 2010, citing "more weakness for single-family housing and a steeper decline for public works."
Then, there was the July debt-ceiling debate in Washington. While it remains to be seen what direct impact the final bill's spending cuts will have on construction, it's probably safe to say that three or so weeks of listening to threats of a future national financial calamity didn't do much to help ease the level of uncertainty among companies considering moving forward on construction projects or capital-improvement programs. (No matter your politics on the matter, it's probably easy to agree with the results of this poll where Americans most popularly characterized the debate as "ridiculous," "disgusting" and "stupid.")
Bottom line: I'm just not sure which way this market is heading. Are Southeast private-sector firms finally confident enough in recovery to start moving forward on projects -- so we'll start to hear more project announcements like the ones I mentioned above? Or will a possible further national economic slowdown cause owners to take pause?
What do you think? Share your industry perspective with our readers below!